The secret sauce for survival
My fellow Canadians are famous for many firsts. We made the first California roll, the first telephone, the first iPhone (well, the Blackberry) and as you would expect from a snow-filled land, the first snow blower. We were the first to make the keen observation that peanuts were better in butter form and now Canucks are the first to start a path back down from the peak of inflation. The Bank of Canada, led by the best name in central banking, Tiff Macklem, cut rates by .25 basis points. Canadians also invented road lines, so it is fitting that the True North is the first Western economy to start to pull the car out of the ditch and put it back onto the highway.
With the Euros going lower as well, will we join our northern friends in the rate cut party? Not yet. Canada, the EU and our Kiwi bros went harder and higher than we did. They all point the way, though, through our short-term future and longer-term realties. Safe economic driving is about focusing on the bigger picture while not losing sight of the kid on P-plates hiding in your blind spot.
Canada bought sensors and took their medicine sooner than we did. They have cut immigration by targeting which universities in which provinces can take in overseas students; if you don’t live there (even your humble correspondent) you can’t buy a house; and they pushed interest rates a full point above us. The key to their inflation battle is that while employment has been growing it is at a slower pace than the working-age population, which is suppressing wages as younger workers tend to be cheaper (just not as cheap as they used to be).
They have also accepted that housing inflation is driven by different forces than other Consumer Price Indicators and are fighting that through building more stock and taking over planning from Municipalities. It looks like Australian polis are in the process of fast following and starting to tackle the underlying reasons creating ongoing inflation. Universities Australia being up in arms means renters might end up high fiving before we see Santa come down the chimney this year.
The three inflation devils we are all learning to live with
They show up in the short term as services inflation (everything from the dentist to disaster insurance costs 15% more on average), energy inflation (everything from diesel to desalinated water costs 50% more) and wage inflation (everything from Data Analysts to Dessert Makers cost 10% more). But they are not micro issues that are going away as interest rates fall.
They are macro in every facet and have profound consequences for us as individuals, the communities we live in and the businesses for which we work. They will get worse as pressure points as the world rapidly tries to catch up to a train labelled climate change, population decline and the realities of a fully digitised power eating world. It is as simple as a case of supply and demand gets. We need to supply more energy (clean please) for less people using way more energy hungry technology. Like any major infrastructure project, it is going to take more time and cost more than we could possibly imagine.
The trick to taming the three devils is to offset inflationary pressures with something deflationary at the same time. Our world only has one deflationary force with the power to tame every inflation dragon – technology. The last deflationary technology in our world was the internet or, better put, digital connectivity. It was so deflationary that it drove interest rates towards zero over a twenty-year period. Australia, whether we like it at the minute or not, actually needed a bit of inflation to avoid looking like Japan, where everyone is old and investment return can only be found by buying up companies around the world. Our decades of low interest led to one of the biggest consumer debt piles on earth, mostly at variable rates off the back of surging house prices. We are paying full freight at the minute.
The next downward pressure
In our current malaise we forget all the amazing utility that has been built into our world over the last twenty plus years. For every FaceTikInstaApp wasting hours of your life best focused elsewhere, there is a Xero saving everyone trying to make a crust two weeks of time per year.
Will the next deflationary pressure be AI? While in the very short term I am very short on the actual use cases for AI beyond summarising and indexing, in the long term I am very long on its effects. Rather than read it all, we will trust the summary, rather than search for that random thing, we will prompt and discover it was right where we left it. It will find efficiency the same way that digitally connecting the world did. Information will be able to be not just searched for, but prompted and indexed by the operator not the engine.
The reality is catching up with the hype when it comes to use cases for AI. Ultimately it is a tool that will be in everything we use and do. It will automate, assist and likely annoy. It will be deflationary because it will make it easier to do the parts of the task that require repetition, accuracy and memory. Whether you are tiling a wall, working with a robot to save your back or are a humble brand strategist doing another category audit, AI and its sister Automation will make that quicker with less guesswork. The cats are hunting the pigeons.
Cause and effect
While everyone in our little part of the world is worried about whether AI will eat the agency and marketing world (top tip: we gave it a great start point to do so) for me it is better to think about whether it will eat the actual value we create and capture for clients. As marketers our job is to make and manage the intangible value of the brand so we can sell the actual utility – our product/service/experience. The value of the intangible is drawn from the world of human meaning. I wonder if we really understand this enough as we enter another era that will reshape our industry. We certainly didn’t last time, or we never would have put tools like digital or experience in front of roles like marketers and designers.
Brand is a strange career, where if you do it well you need to be just as in touch with the world of human experience as the cold hard reality of the business-world bottom line. You see the need the business has for meaning and how this can be conveyed into the culture of the day through the permanence of human meaning. I know some will argue that today you just create a great product and the rest goes from there but that really is not true. The ultimate category collapsing, value creating product of the last fifty years, the iPhone, is still connected to individual expression and connectivity. The newest, Nvidia, is linked to that age old trope of rebellion. Suck it Intel your CEO ain’t signing bras in public like our Jensen is. We see your white lab coat and raise you black leather jackets fuckers.
Intangible things are created from fishing for and finding interesting tensions. By their nature they do not exist yet. Currently AI can only look within what is. It is the prompts that bring the creativity and draw out the new connections. While everyone may laugh when Google Gemini tells you that glue is a great pizza sauce, creating a pizza glue that keeps the toppings actually on the pizza actually sounds like something useful that a sauce maker should do (as long as it doesn’t taste like glue of course). It is factually wrong, but it takes creativity to see how it might be right. That is the essence of our humanity, or we would not have even created fire, farming or fuzzy inferences that form the basis of AI to bloody begin with. We see what is possible not what is.
The future looks forgettable
My worry about AI is less about it taking our jobs as it will mainly take away drudgery just like digital connectivity did. It will have serious effects on society that range from deep fakery to other types of skullduggery but eventually we will come to recognise it and maybe deal with it. I worry more that in our search to integrate AI into everything, we are only going to end up doing more and more that looks, sounds and feels exactly the same.
We are barking up the wrong tree. We are the creator, AI is the implement and human culture is the pond. Through this lens I hope we unleash a wave of actual creativity rather than copies of what was. It is lamentable that the best thing about TikTok is kids doing parodies rather than reinventions. It gives me hope when I see Brent Smart at Telstra making 26 stop motion ads to make one point. It’s the job folks. Find the way in and brand the shit out of it to make it yours.
Some of the crew presenting at Cannes in Cairns did a great job of further making the point that as an industry we have become obsessed with short term tactics designed to drive what can be measured. While they were doing that, Ritson and I were debating what is worth measuring and if you are interested in watching more you can do so here.
I probably land in the middle when it comes to measurement, but do think in the search for the rulebook we have forgotten the playbook. In doing this the world and our role in it has become the definition of death. A commodity. Creation not convention as ever offers the only strategy that will stick.
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Be better to each other.
